closing costs
Complaint
jeffrey abare
Country: United States
While opening a checking account with Wells Fargo, I was referred to their mortgage refi people. I gave them a bunch of information and a week later received the closing disclosures in the mail.
11.7% closing costs!
So, I sent the paperwork back unsigneed along with a letter of outrage. A week later, I received their letter of denial -- saying they rejected me because I have insufficient resources to pay costs. I dropped them -- now they're trying to maintain they dropped me! What impact will this have on my credit rating?
11.7% closing costs!
So, I sent the paperwork back unsigneed along with a letter of outrage. A week later, I received their letter of denial -- saying they rejected me because I have insufficient resources to pay costs. I dropped them -- now they're trying to maintain they dropped me! What impact will this have on my credit rating?
Comments
You applied for a refi on a mortgage, didn't like the terms, and rejected it.
You can't know the detailed terms until you apply, and you aren't bound to agree in advance.
(In fact, federal law even allows you 3 business days after closing to recind your mortgage borrowing decision before the loan transfers complete, to allow you to back out if, say, some last minute change got shoved on you at closing, or for no reason at all.)
Nothing wrong with that, and there isn't some special credit report code for consumers who reject a loan, nor for when banks reject a loan.
A loan that didn't go through is not visible on your credit reports, and the FICO scoring mechanism has no way to somehow figure that into a score.
What shows is your various credit tradelines with their payment histories, and your current balances and credit limits on credit accounts, including your current mortgage payment record and balance, along with the age of the accounts in the form of the date the accounts were opened.
FICO scores are based on:
1) negative payment reports, including collection reports, and their ages (negative reports decrease scores, more recent negative reports decrease them more)
2) age of credit accounts (long history including older open accounts increases scores)
3) debt balance to available credit lines (lower debt to available credit increases scores)
4) diversity of accounts (it can help to have a mix including both credit cards and a mortgage)
5) recent inquiries (credit pulls) such as for an application for a credit card or mortgage. (several recent inquiries may cause a drop in score, as it implies you are actively looking for credit)
Your credit file has no way to show your resources, insufficient or not. It does not show your income, nor does it show balances in your bank accounts or even that you have bank accounts, stock trading accounts, land holdings (although it will show mortgage history), vehicles (although it will show auto loan history), 401k portfolios, etc. Although it won't show your checking accounts, it may show your check guarantee line of credit.
About the only effect on your score from just deciding not to refi would be the temporary and minor effect of the mortgage credit inquiry. That typically only affects a good score by a small number of points, and fades out after about 6 months, disappearing after 2 years.
Multiple mortgage or auto loan inquiries within a 45 day period count as one, so shopping for a good rate does not degrade your credit as you shop.
You can find more information on myfico.com
What you should watch out for is closing old credit accounts with a long history, as that may depress your scores both due to the decrease in average account length, and due to increasing your balance to total credit ratio. Both can make you look more "risky" so if you are intending to close credit accounts, even if you are pissed, do so with care, preferably by growing new banking and credit relationships first while your score is still high, and allowing them to "age" a bit.
Establish credit relationships and a good credit score when you don't need it, so you can benefit from it when you do need it.